{"id":19441,"date":"2020-11-11T14:33:59","date_gmt":"2020-11-11T09:03:59","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19441"},"modified":"2020-11-11T14:35:42","modified_gmt":"2020-11-11T09:05:42","slug":"general-public-utility-under-ngo","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/general-public-utility-under-ngo\/","title":{"rendered":"Overview on General Public Utility under NGO"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In order to make a purpose of <a href=\"https:\/\/corpbiz.io\/ngo-registration\"><strong>NGO charitable<\/strong><\/a> it is not essential that is should be beneficial to the poor section of the society. It is necessary that the benefit to provide a section of the public as eminent from specified individuals.\u00a0The object of general public utility includes benefit to a section of the public and it is not obligatory that the object should benefit the whole mankind of country or state.\u00a0It is sufficient if the intention of the <strong><em>General Public Utility<\/em><\/strong> is to benefit a specific and specialized section of the public having a common quality as notable from a specified individual.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/general-public-utility-under-ngo\/#Purpose_of_General_Public_Utility\" >Purpose of General Public Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/general-public-utility-under-ngo\/#Object_of_General_Public_Utility\" >Object of General Public Utility<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/general-public-utility-under-ngo\/#Branches_of_Section_215_of_Income_Tax_Act\" >Branches of Section 2(15) of Income Tax Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/general-public-utility-under-ngo\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Purpose_of_General_Public_Utility\"><\/span>Purpose of General Public Utility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Following are the\u00a0purposes of general public utility. <\/strong><\/p>\n\n\n\n<p>1. Instituting chambers of commerce and industry, <a href=\"https:\/\/corpbiz.io\/society-registration\"><strong>registered societies <\/strong><\/a>federation and trade associations recognized with purpose of promoting <strong><em>Trade, Commerce<\/em><\/strong> as well as <strong><em>Industry<\/em><\/strong>.<\/p>\n\n\n\n<p>2. All institutions should be incorporated <strong><em>without any profit motive<\/em><\/strong> and can be registered\u00a0 for any of the following purposes-<\/p>\n\n\n\n<ul><li>For the development and promotion of\nagriculture;<\/li><li>For the enhancement and development of scheduled\ncaste as well as tribes;<\/li><li>For the welfare of the police force and their\nfamilies;<\/li><li>For encouraging road safety;<\/li><li>To communicate technical education, reducing\nunemployment &amp; setting up model industries in villages.<\/li><\/ul>\n\n\n\n<p>3. Establishment for <strong><em>promoting<\/em><\/strong> cottage or <strong><em>village industries<\/em><\/strong>, craftsman and teaching unemployed persons, handicrafts, etc.<\/p>\n\n\n\n<p>4. Institutions should be established to <strong><em>promote creative principles<\/em><\/strong>, literature, music, fine arts, dance, etc.<\/p>\n\n\n\n<p>5. The established institutions that owns auditoriums, \u2018wadis\u2019, dharamshalas, memorial halls for culture activities, gaushalas and sanatorium which are given for <strong><em>rent for charitable purpose<\/em><\/strong>.<\/p>\n\n\n\n<p>6. Foundation for the <strong><em>development of a botanical<\/em><\/strong> garden, natural beauty, and for carrying on literary and cultural activities.<\/p>\n\n\n\n<p>7. Institutions established for preservation of places of <strong><em>historic interest<\/em><\/strong> like setting up and maintenance or renovation of museum or library.<\/p>\n\n\n\n<p>8. Institutions established for <strong><em>Research Purpose<\/em><\/strong>;<\/p>\n\n\n\n<p>9. Institutions established for the promotion of cricket or other sports among the public.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Object_of_General_Public_Utility\"><\/span>Object of General Public Utility<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The advancement of any other object\nof general public utility shall&nbsp;not be considered as a charitable&nbsp;purpose\nunder <strong><em>Section 2(15) of Income Tax Act<\/em><\/strong>, if it comprises carrying out\nof any <strong><em>Trust activity<\/em><\/strong> in the form of trade or business for\nprofit-making&nbsp;purpose or a fee.<\/p>\n\n\n\n<p>On the other hand, this limit\nis&nbsp;not applicable&nbsp;if the total income receipts from any activity whose\ndepiction is like trade, commerce or business,&nbsp;does not exceed the limit\nof 15 %&nbsp;of total revenue. The income receipts have to be of the relevant year\nallowing from the assessment year.<\/p>\n\n\n\n<p>It will only be applicable if activity gets undertaken in the course of carrying out of such\u00a0development of any other object\u00a0of\u00a0general public utility. It should be regardless of the nature of usage, application or retention of the income received from such activities of the <a href=\"https:\/\/corpbiz.io\/trust-registration\"><strong>Trust<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Branches_of_Section_215_of_Income_Tax_Act\"><\/span>Branches of Section 2(15) of Income Tax Act<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>We can say that six out of the\nseven branches mentioned above&nbsp;allow 100% off from commercial activity\nincidental to the main charitable objectives. These six branches are very dear\nto the government. Although these branches may look restrictive; only if we\ncorrectly interpret each one would we be able to understand the broad scope it\noffers. Let us understand each of these six branches from the eyes of a tax officer.<\/p>\n\n\n\n<p><strong>Let us discuss them one by one.<\/strong><\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong><em>Six branches of section 2(15)<\/em><\/strong>\n  <\/td><td>\n  <strong><em>How is this branch perceived by NGO\u2019s?<\/em><\/strong>\n  <\/td><td>\n  <strong><em>What does it Imply?<\/em><\/strong>\n  <\/td><\/tr><tr><td>\n  <em>Relief of the poor<\/em>\n  <\/td><td>\n  Ask for donations and apply those donations to feed poor with food, clothing\n  and other immediate essentials.\n  <\/td><td>\n  Apart from receiving donations, NGO\u2019s may even take up a commercial\n  activity such as rent a place \/sell sanitary napkins\/ earn interest on FDR.\n  Proceeds from these business activities will be considered as incidental to\n  the objective of relief of the poor if they are applied in a prescribed\n  manner to raise the living standards of the poor.\n  <\/td><\/tr><tr><td>\n  <em>Education<\/em>\n  <\/td><td>\n  Covers schools, colleges, other institutions imparting academic\n  knowledge through books\n  <\/td><td>\n  Education is an inclusive term and includes vocational courses and\n  skill development also. The exemption under section 10(23C) already covers\n  schools\/ colleges. Education here implies&nbsp;helping someone become more\n  skilled&nbsp;even though such teaching may take place in a camp or temporary\n  structures such as tents.\n  <\/td><\/tr><tr><td>\n  <em>Yoga<\/em>\n  <\/td><td>\n  Cover NGO&#8217;s promoting Yoga by conducting classes free of cost or at\n  nominal charges to prove their charitable motives. Any commercial activity,\n  such as the sale of yoga books or mats, will be taxable as a business\n  activity.\n  <\/td><td>\n  Yoga can be an alleviating experience and to create an ambience for\n  such expertise, NGOs may expend much money towards it. Hence, in\n  return,&nbsp;they can charge a higher fee&nbsp;which is commensurate with the\n  benefits offered by such classes. Yoga centres may also&nbsp;sell yoga mats\n  and yoga manuals; earn profits as these commercial activities are incidental\n  to the main objective of promoting yoga.\n  <\/td><\/tr><tr><td>\n  <em>Medical relief<\/em>\n  <\/td><td>\n  Covers Hospitals, medical clinics and large setups to aid medical\n  relief\n  <\/td><td>\n  Medical relief is also a term with broad meaning. An exemption covers\n  hospitals and other medical institutions under Section 10 (23C). Hence, the\n  objective of stating medical relief as a charitable purpose here is to\n  include different efforts made in the field of medicine such as psychology,\n  homoeopathy, physiotherapy, naturopathy or even by selling herbal medicines.\n  <\/td><\/tr><tr><td>\n  <em>Preservation of the environment<\/em>\n  <\/td><td>\n  Includes massive-scale efforts towards preserving the environment, such\n  as: &#8211; global warming &#8211; water harvesting &#8211; pollution control &#8211; tree plantation\n  &#8211; preventing deforestation &#8211; preserving rare wildlife species.\n  <\/td><td>\n  Preservation of the environment is not limited to only substantial\n  scale efforts. Even small initiatives such as conducting environmental\n  programs aimed at improving the health of people, providing sanitation and\n  maintenance of the clean environment, garbage recycling, finding alternatives\n  to plastic, and maintaining nurseries or orchards or even providing\n  horticulture services are all covered under preservation of the environment.\n  <\/td><\/tr><tr><td>\n  <em>Preservation or conservation of\n  monuments or places or objects of artistic or historical importance<\/em>\n  <\/td><td>\n  NGOs established for preservation of historical objects\n  <\/td><td>   This branch is generally understood by NGO&#8217;s in real sense. However, we would like to emphasize that monument or places or objects of historical   objects are the ones notified by the government and do not include creating a model of ancestral homes.   <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h3 class=\"wp-block-heading\">7<sup>th<\/sup> Branch of Section 2(15) of Income\nTax Act <\/h3>\n\n\n\n<p>Advancement of any other object of general public utility is a\u00a0residuary branch, in other words \u2013 not so dear to the government. Due to its broad nature, it covers every charitable activity possible. It is seen as a harm that is created by the disability formed by the proviso to <em><strong>Section 2(15) of the Income Tax Act<\/strong><\/em><sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/i-am\/trust.aspx\"><strong>[1]<\/strong><\/a><\/sup><strong>. <\/strong>Any commercial business from the advancement of general public utility is eligible to be treated as a charitable purpose\u00a0only if it fulfills the following two conditions:-<\/p>\n\n\n\n<ul><li>Commercial activity undertaken is incidental to\nthe main object of the advancement of general public utility;<\/li><li>Revenue from such commercial activity does not\nexceed more than 20% of total receipts of the NGO.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Even after laying down the\nprovisions related to <strong><em>General Public Utility<\/em><\/strong>, confusion\nhas still prevailed.&nbsp; Nobody has experienced this situation more than new\nNGO\u2019s who have practically been held in this situation right at the very\nstart.&nbsp;<\/p>\n\n\n\n<p>It is necessary that the benefit to provide a section of the public as eminent from specified individuals.\u00a0The object of general public utility includes benefit to a section of the public and it is not obligatory that the object should benefit the whole mankind of country or state.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/registration-of-trust-under-income-tax-act\/\">Overview of Registration of Trust under Income Tax Act\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In order to make a purpose of NGO charitable it is not essential that is should be beneficial to the poor section of the society. It is necessary that the benefit to provide a section of the public as eminent from specified individuals.\u00a0The object of general public utility includes benefit to a section of the [&hellip;]<\/p>\n","protected":false},"author":18,"featured_media":19444,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[1206],"acf":{"service_id":"10"},"authorName":"Sakshi Srivastava","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/IMG-20180130-WA0007.jpg","authorDescription":"Sakshi has pursued B.B.A.LL.B.(IPR Hons.). She is an avid reader and is keen to gather and share her knowledge on the subjects relating to IPR, Company Law and GST. Priorly she has worked as a legal researcher and vide her articles she aims at improving the core knowledge of the subjects to the masses.","postViews":9631,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19441"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19441"}],"version-history":[{"count":12,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19441\/revisions"}],"predecessor-version":[{"id":19455,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19441\/revisions\/19455"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19444"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}